Do Tradable Green Certificates Promote Regional Carbon Emissions Reduction for Sustainable Development? Evidence from China

Guori Huang, Zheng Chen, Nan Shang, Xiaoyue Hu, Chen Wang, Huan Wen () and Zhiliang Liu ()
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Guori Huang: Energy Development Research Institute, China Southern Power Grid, Guangzhou 510530, China
Zheng Chen: Energy Development Research Institute, China Southern Power Grid, Guangzhou 510530, China
Nan Shang: Energy Development Research Institute, China Southern Power Grid, Guangzhou 510530, China
Xiaoyue Hu: Institute of Quality Development Strategy, Wuhan University, Wuhan 430072, China
Chen Wang: School of Geodesy and Geomatics, Wuhan University, Wuhan 430072, China
Huan Wen: Institute of Quality Development Strategy, Wuhan University, Wuhan 430072, China
Zhiliang Liu: Institute of Quality Development Strategy, Wuhan University, Wuhan 430072, China

Sustainability, 2024, vol. 16, issue 17, 1-20

Abstract: The tradable green certificate (TGC) scheme is an important approach for mitigating carbon emissions within the context of a renewable energy development strategy and regional sustainable development. However, studies investigating the role of TGCs in encouraging carbon emissions reduction in China are limited and inconclusive due to ignoring the interference of other renewable energy policies and little distinguishing the impact of different green certificates. Using Chinese provincial data from 2013 to 2023, this study employs a difference-in-differences strategy to estimate the effect of the TGC policy on regional carbon emissions. The results reveal that the TGC policy significantly reduces provincial carbon emissions, and this reduction is predominantly contributed by certificate-electricity integration green certificates rather than certificate-electricity separation certificates. A 1% increase in the provincial trade volume of certificate-electricity integration green certificates can reduce total provincial carbon emissions by 0.8–1.3%. These findings hold across a series of rigorous robustness tests. This study also explains the different effects between certificate-electricity integration and certificate-electricity separation green certificates by the concept of additionality. To effectively reduce carbon emissions in the future, the TGC system must meet the requirement of additionality. These insights can provide reference for the improvement of TGC policy to better achieve the carbon reduction objective and sustainable development.

Keywords: tradable green certificate; carbon emissions reduction; additionality; difference-in-differences strategy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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